In this special Making Sense edition of Ask The Headhunter, Nick shares insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards, or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

There are many theories about why the labor market is less efficient now in matching buyers of skills with sellers.

The reason the labor market seems less efficient is because applicant tracking systems (ATS) and job boards fail to match job applicants to jobs, and instead, stimulate phony recruiting activity by human resources (HR) departments. The employment system is now clogged with so much crud spawned by these databases that even Federal Reserve Chairwoman Janet Yellen is confused. ATS databases like LinkedIn and Oracle’s Taleo — these darlings of the stock market — are making it more difficult for employers to hire.

While news media ruminate on this problem, everyone skims over the substance of it: these systems don’t work. There’s no surprising “economic phenomenon” going on. The new recruiting technology just doesn’t work — but business is wholly invested in it, so deeply that now even Yellen is rationalizing and trying to figure out “why the labor market is less efficient.” The market is never less efficient.

“There’s no surprising ‘economic phenomenon’ going on. … The market is never less efficient.”

Applicant tracking systems take managers out of recruiting and hiring, and this breaks the process. What we’re left with is a high-tech fantasy of recruiting that’s propped up by silly HR executives, LinkedIn founder Reid Hoffman, and venture capitalists who fund recruiting automation when they know nothing about recruiting or hiring.

It needs to be repeated again and again because employers pretend otherwise: Modern recruiting technology is a failure. It’s why 25,000 engineers that applied for one routine engineering job were all rejected by the software. It’s why a CEO who tested his HR department by applying for a job at his own company was ignored by the software.

The ruminations and “analysis” going on in Washington completely ignore the tools being used to hire. The problem is right under our noses: These systems are BS. We know this because in the middle of what’s arguably the biggest talent glut America has ever seen, employers seem to honestly believe there’s a talent shortage. (See “Ask The Headhunter: Unemployment — Made in America by Employers.”)

Do I sound upset? I am. I charge top business schools good money to explain the problem to their executive MBA students (Cornell, UCLA, Northwestern, among others). Earlier this week I did a pro bono presentation to a career group at the local YMCA, where I heard sad stories from highly skilled, well-educated, unemployed people who are losing their homes because America’s high-tech employment system is broken. I’m very angry.

Recruiting was not suddenly invented by Monster.com and Taleo. Managers have been recruiting successfully for decades, and the best still do. Their overhead is low because they don’t invite thousands of inappropriate applicants to try their luck — applicants they must then waste time “processing.” Smart employers go where the people they want to recruit hang out – and they meet and talk with them. The total cost of hiring this way drops enormously, the standard of behavior is far higher, and the results are incredibly better.

LinkedIn, Monster and ATS vendors are not selling recruiting solutions to employers; they’re selling database services and “good luck!” The talent that literally goes begging is very angry because employers use Taleo as an excuse to treat them like cattle.

But HR will never admit that the solution to this epic failure is to drastically change how employers recruit and hire.

We’re told that automation is eliminating jobs that don’t require creativity, human judgment, deft social and communication skills, and “high touch.” Yet employers pretend that finding, assessing, judging, cajoling, and convincing people to come work for them doesn’t require all that. But it does. And software can’t do it. (See “Big HR Data: Why Internet Explorer users aren’t worth hiring.”)

“…Employers don’t need access to millions of people to hire effectively. They never did. They just think they do because that’s the marketing.”

There is no need to process thousands of inappropriate applicants if you recruit carefully. LinkedIn’s Reid Hoffman is selling snake oil; employers don’t need access to millions of people to hire effectively. They never did. They just think they do because that’s the marketing. LinkedIn is the best electronic phone book ever invented – but it’s really not much more than that. It’s time employers stopped expecting it to “deliver hires.”

Articles like the one from Bloomberg keep hinting at America’s recruiting problem, but there seems to be a hesitation to call it what it is – a huge failure. The feds blame it on the workforce, but labor researchers at the Wharton School of Management have already shown that’s not true at all. There’s no change in the quality of our workforce; the only changes are in how employers behave. It’s a case of the emperor running around buck naked – and everyone’s talking about how cool his wardrobe is.

Nonetheless, the “spend” is going up. Employers are investing more and more in recruiting automation, while success rates at filling jobs seem to be going nowhere but down. (If companies argue with this, I suggest they convene a focus group of 20 job seekers to get the other side of the story. After all, it’s what their marketing departments do to suss out the truth about their customers’ experience. Are prospective hires less valuable than prospective customers?)

What this tells us is that it’s time for HR to shift its “spend.” But I doubt that will ever happen because HR gets a lot of cover from the technology it buys. The media need to start looking at the real story to reveal the connection.

“There’s no change in the quality of our workforce; the only changes are in how employers behave.”

America’s employment system is broken. I wish America’s HR executives could have heard the people at the YMCA meeting I spoke to. Those earnest job seekers understand the problem because they live it. Unlike HR execs, these job seekers don’t still get paid when the system fails.

It’s time for managers to start doing their own recruiting again. (See “The Recruiting Paradox.”) Millions of job seekers — and perhaps a lot of boards of directors — are counting on it. The labor market is not “less efficient now.” America needs to start admitting that this fantasy “talent shortage” in a growing economy is in part due to recruiting technology that just doesn’t work.

Dear readers: Is the “talent shortage” real? Do you think the way companies recruit has improved or deteriorated? Has technology helped or hurt your efforts to get a new job? Do employers recruit and hire with more or less human contact and finesse than they used to?

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